Crude oil for April delivery hit $110 per barrel. The US dollar
fell to a new low against the Euro. It now takes $1.55 to purchase
one Euro.

These new highs against the dollar are the ongoing story of the collapse
of the US dollar as world reserve currency and corresponding collapse
of American power.

Each new decision from the insane Bush regime pushes the dollar a
little further along to oblivion. The same Fed announcement that boosted
the stock market on March 11 sent the dollar reeling and the price
of oil up. The Fed’s announcement that it and other central
banks are going to deal with the derivative crisis by monetizing $200
billion of the troubled instruments signaled more dollar inflation.

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Of course, something needed to be done to forestall an implosion
of the financial system, but a less costly alternative was at hand.
The mark-to-market rule could have been suspended in order to halt
the forced sale and write down of assets and to provide time in which
to sort out derivative values, which are higher than the fire sale
prices.

More pressure on the dollar resulted from the decision to award the
European company, Airbus, a $40 billion contract that could reach
$100 billion to build US Air Force tankers. In simple terms, that
means another $40 to $100 billion added to the US trade deficit, and
a loss of $40 to $100 billion in US Gross Domestic Product and associated
jobs.

Of course, the Bush regime had to award the contract to Europe as
a payoff for Europe’s support of the Bush regime’s wars
of aggression in the Middle East. Europe is not going to provide Bush
with diplomatic cover for his wars and NATO troops for his war in
Afghanistan without a payoff.

Here is the picture: The US economy, which has been kept alive by
enormous debt expansion that has over-reached its limit, is falling
into recession. The traditional way out by expanding the supply of
money and credit is blocked by the impaired banking system, the levels
of consumer debt, the collapsing value of the US dollar, and rising
inflation.

The Bush regime is attempting to bypass the stalled credit expansion
by sending Americans $600 checks, money that will mainly be used to
reduce existing credit card debt and not to fund new consumption.

The US is dependent on foreigners not only for energy but also for
manufactured goods and advanced technology products. The US is dependent
on foreigners to finance our consumption of $800 billion annually
more than the US produces. The US is dependent on foreigners to finance
its red ink wars, and the US government’s budget deficit is
now expanding as tax revenues decline with the declining economy.

The bottom line: US power is enfeebled. US power depends on the willingness
of foreigners to finance our wars and on the willingness of foreigners
to continue to accumulate depreciating dollar assets.
The US cannot close its trade deficit. Oil prices are rising, and
offshore production of goods and services for US markets results in
a dollar-for-dollar increase in imports, while reducing the supply
of domestic goods available for export.

The US cannot close its budget deficit while it is squandering vast
sums on wars that serve no US purpose, handing out $150 billion in
red ink rebates, and falling into recession.

US living standards, which have been stagnant for years, will plummet
once dollar decline forces China off the dollar peg. So far prices
of the Chinese-made goods on Wal-Mart shelves have not risen, because
the Chinese currency, pegged to the dollar, falls in value with the
dollar. In a word, tottering US living standards are being supported
by China’s willingness to subsidize US consumption by keeping
its currency grossly undervalued.

The US is overextended economically and militarily, just as was Great
Britain with the fall of France in the opening days of World War II.
The British had the Americans to bail them out. After the chewing
gum and bailing wire patch-ups are exhausted, who is going to bail
us out?